Wheaton Precious Metals Announces Second Quarter Results for 2019 and Declares Third Quarterly Dividend of 2019
FOR IMMEDIATE RELEASE TSX: WPM August 8, 2019 NYSE: WPM
WHEATON PRECIOUS METALS ANNOUNCES SECOND QUARTER RESULTS FOR 2019 AND DECLARES THIRD QUARTERLY DIVIDEND OF 2019
Vancouver, British Columbia – Wheaton Precious Metals™ Corp. (“Wheaton” or the “Company”) is pleased to announce its results for the second quarter ended June 30, 2019. All figures are presented in United States dollars unless otherwise noted.
In the second quarter of 2019, Wheaton generated over $100 million in operating cash flow and had attributable gold production of over 100,000 ounces. Through the first half of 2019, Wheaton is on track for record annual gold production and reconfirms 2019 gold equivalent production guidance.
Operational Overview
| Q2 2019 | Q2 2018 Change | ||
|---|---|---|---|
| Ounces produced Gold Silver (000's) Palladium Ounces sold Gold Silver (000’s) Palladium | 90,391 11.3 % 5,977 (19.1)% - n.a. 87,140 3.4 % 5,972 (29.0)% - n.a. | ||
| 100,577 | |||
| 4,834 | |||
| 5,736 | |||
| 90,077 | |||
| 4,241 | |||
| 5,273 | |||
| Sales price per ounce Gold Silver Palladium Cash costs per ounce 1 Gold 1 Silver 1 Palladium 1 Cash operating margin per ounce 1 Gold 1 Silver 1 Palladium 1 | $ 1,305 1.1 % $ 16.52 (9.6)% $ n.a. n.a. $ 407 3.2 % $ 4.54 13.2 % $ n.a. n.a. $ 898 0.2 % $ 11.98 (18.3)% $ n.a. n.a. | ||
| $ | 1,320 | ||
| $ | 14.93 | ||
| $ | 1,381 | ||
| $ | 420 | ||
| $ | 5.14 | ||
| $ | 247 | ||
| $ | 900 | ||
| $ | 9.79 | ||
| $ | 1,134 | ||
| Revenue Net (loss) earnings Per share Adjusted net earnings 1 Per share 1 Operating cash flows Per share 1 Dividends declared 1 Per share | $ | 189,466 | $ 212,400 (10.8)% $ 318,142 n.a. $ 0.72 n.a. $ 72,340 (38.1)% $ 0.16 (38.4)% $ 135,200 (19.2)% $ 0.31 (19.4)% $ 39,888 0.6 % $ 0.09 0.0 % |
| $ | (124,694) | ||
| $ | (0.28) | ||
| $ | 44,808 | ||
| $ | 0.10 | ||
| $ | 109,258 | ||
| $ | 0.25 | ||
| $ | 40,133 | ||
| $ | 0.09 |
All amounts in thousands except gold and palladium ounces produced and sold, per ounce amounts and per share amounts.1
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Highlights
- The increase in attributable gold production was primarily due to the commencement of the San Dimas gold stream effective May 10, 2018, and the Stillwater precious metals stream effective July 1, 2018, as well as higher production at Sudbury.
- The decrease in attributable silver production was primarily due to the termination of the San Dimas silver stream effective May 10, 2018 and lower production from Peñasquito due to an illegal blockade.
- The increase in gold sales volume was due to the higher production levels, partially offset by negative changes in the balance of payable gold produced but not yet delivered to Wheaton.
- The decrease in silver sales volume was due to the lower production levels coupled with negative changes in the balance of payable silver produced but not yet delivered to Wheaton.
- The net loss incurred during the current period was a result of a non-cash impairment charge in the amount of $166 million relative to the Company’s Voisey’s Bay PMPA, while during the prior period the Company terminated the previously owned San Dimas silver purchase agreement, resulting in a gain on disposal of $246 million.
- The decrease in adjusted net earnings was primarily due to lower margins relative to San Dimas, which was converted to a gold stream on May 10, 2018, lower sales relative to Peñasquito resulting from the illegal blockade, lower sales relative to Salobo resulting from negative changes in ounces PBND and higher finance costs.
- Declared quarterly dividend of $0.09 per common share in accordance with Wheaton’s setting of a minimum quarterly dividend of $0.09 per common share for the duration of 2019, subject to the discretion of the Board of Directors.
Subsequent to the Quarter
- Hudbay Minerals Inc. (“Hudbay”) announced that the U.S. District Court for the District of Arizona issued a ruling vacating and remanding the U.S. Forest Service’s issuance of the Final Record of Decision for the Rosemont project in Arizona, such that Rosemont cannot proceed with construction at this time. Hudbay states that they believe that the Court has misinterpreted federal mining laws and Forest Service regulations as they apply to Rosemont and as such, they will be appealing the decision.
Reconfirming Gold Equivalent Production Guidance
- Wheaton’s estimated attributable production in 2019 is on track to meet its forecast of approximately 690,000 gold equivalent ounces2; however, the mix of precious metals production has been updated based on developments in the first half of the year. Specifically, Wheaton now expects to produce approximately 385,000 ounces of gold, 22.5 million ounces of silver and 22,000 ounces of palladium.
- For the five-year period ending in 2023, the Company continues to estimate that average annual gold equivalent production2 will amount to 750,000 ounces. As a reminder, Wheaton does not include any production from Rosemont in this five-year guidance.
“Wheaton once again generated strong operating cash flow in the second quarter at well over $100 million,” said Randy Smallwood, President and Chief Executive Officer of Wheaton Precious Metals. “We are unique in the streaming and royalty space as our current revenue is derived from 100% precious metals production with significant leverage to not only the price of gold, but also to other precious metals including silver and palladium. As always, we remain
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focused on the sustainable management of our diverse portfolio of low-cost, long-life assets and delivering superior shareholder value.”
Financial Review
Revenues
Revenue was $189 million in the second quarter of 2019, on sales volume of 90,100 ounces of gold, 4.2 million ounces of silver and 5,300 ounces of palladium. This represents an 11% decrease from the $212 million of revenue generated in the second quarter of 2018 due primarily to (i) a 29% decrease in the number of silver ounces sold, (ii) a 10% decrease in the average realized silver price ($14.93 in Q2 2019 compared with $16.52 in Q2 2018); partially offset by (iii) the introduction of palladium sales effective Q3 2018, (iv) a 3% increase in the number of gold ounces sold; and (v) a 1% increase in the average realized gold price ($1,320 in Q2 2019 compared with $1,305 in Q2 2018).
Costs and Expenses
Average cash costs¹ in the second quarter of 2019 were $420 per gold ounce sold, $5.14 per silver ounce sold and $247 per palladium ounce sold, as compared with $407 per gold ounce and $4.54 per silver ounce during the comparable period of 2018. This resulted in a cash operating margin¹ of $900 per gold ounce sold, $9.79 per silver ounce sold and $1,134 per palladium ounce sold, a decrease of 18% per silver ounce sold while the cash operating margin¹ per ounce of gold sold was virtually unchanged as compared with Q2 2018. The decrease in the silver cash operating margin was primarily due to a 10% decrease in the average realized silver price in Q2 2019 compared with Q2 2018.
Adjusted Net Earnings and Operating Cash Flows
Adjusted net earnings¹ and cash flow from operations in the second quarter of 2019 were $45 million ($0.10 per share) and $109 million ($0.25 per share¹), compared with adjusted net earnings¹ of $72 million ($0.16 per share) and cash flow from operations of $135 million ($0.31 per share¹) for the same period in 2018, a decrease of 38% and 19%, respectively.
Balance Sheet
At June 30, 2019, the Company had approximately $87 million of cash on hand and $1.1 billion outstanding under the Company's $2 billion revolving term loan (the "Revolving Facility"). The average effective interest rate for the second quarter of 2019 was 4.25%.
Asset Impairment
At the end of each reporting period, the Company assesses each precious metal purchase agreement (“PMPA”) to determine whether any indication of impairment exists. If such an indication exists, the recoverable amount of the precious metal purchase agreement is estimated in order to determine the extent of the impairment (if any).
On June 11, 2018, the Company entered into an agreement (the “Voisey’s Bay PMPA”) to acquire from a subsidiary of Vale S.A. (“Vale”) an amount of cobalt equal to 42.4% of the cobalt production from its Voisey’s Bay mine in Canada, until the delivery of 31 million pounds of cobalt and 21.2% of cobalt production thereafter for the life of mine for a total upfront cash payment of $390 million. Concurrently, Vale also entered into a streaming agreement with Cobalt 27 Capital Corp. (“Cobalt 27”) on the Voisey’s Bay mine with similar terms and conditions to the Voisey’s Bay PMPA.
On June 18, 2019, Cobalt 27 announced that it had entered into an agreement with Pala Investments Limited (“Pala”) whereby Pala would acquire 100% of Cobalt 27’s issued and
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outstanding common shares. The implied price paid by Pala for Cobalt 27’s streaming agreement on the Voisey’s Bay mine was significantly lower than the original upfront cash payment paid by Cobalt 27 to Vale at the time their agreement was entered into. The estimated implied purchase price paid by Pala to acquire Cobalt 27’s Voisey’s Bay stream was determined to be an indicator of impairment relative to the Company’s Voisey’s Bay PMPA.
The Voisey’s Bay PMPA had a carrying value at June 30, 2019, of $393 million. Management estimated that the recoverable amount at June 30, 2019, under the Voisey’s Bay PMPA was $227 million, resulting in an impairment charge of $166 million.
Second Quarter Asset Highlights
During the second quarter of 2019 attributable production was 100,600 ounces of gold, 4.8 million ounces of silver and 5,700 ounces of palladium, representing an increase of 11% and a decrease of 19% for gold and silver, respectively, as compared with the second quarter of 2018.
Operational highlights for the quarter ended June 30, 2019, are as follows:
Salobo
In the second quarter of 2019, Salobo produced 67,100 ounces of attributable gold, virtually unchanged relative to the second quarter of 2018 as lower throughput and recoveries were almost completely offset by higher grades. In Vale’s Second Quarter 2019 Performance Report, Vale reports that the ongoing expansion at Salobo continues to progress with the completion of the earthworks in the crushing and flotation plants in the quarter.
Peñasquito
In the second quarter of 2019, Peñasquito produced 0.7 million ounces of attributable silver, a decrease of approximately 45% relative to the second quarter of 2018 primarily due to lower throughput resulting from an illegal blockade in the quarter partially offset by higher grades. In April 2019, Newmont Mining Corporation and Goldcorp Inc. merged to form Newmont Goldcorp Corporation (“Newmont”). On June 17, 2019, Newmont announced that it was ramping up operations at Peñasquito following the lifting of the illegal blockade and the establishment of a dialogue process sponsored by the national government. Newmont also states that shipments from the mine have resumed and that during the 49-day suspension of operations, the mine used the downtime to bring forward maintenance on a variety of systems and equipment.
San Dimas
In the second quarter of 2019, San Dimas produced 11,500 ounces of attributable gold, an increase of approximately 101% relative to the second quarter of 2018 as the San Dimas gold stream was effective May 10, 2018. According to First Majestic Silver Corp.’s (“First Majestic”) second quarter of 2019 production report, the San Dimas mill processed a total of 172,368 tonnes with average silver and gold grades of 312 g/t and 4.32 g/t, respectively. According to First Majestic, throughput was up 6% and silver and gold grades improved 9% and 3%, respectively, compared to the prior quarter due to higher grades in the Jessica and Victoria veins.
Sudbury
In the second quarter of 2019, Vale’s Sudbury mines produced 9,000 ounces of attributable gold, an increase of approximately 39% relative to the second quarter of 2018 primarily due to higher throughput. As a reminder, production in the second quarter of 2018 was impacted
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by the Coleman mine being shutdown down for unscheduled maintenance from November 2017 to April 2018.
Constancia
In the second quarter of 2019, Constancia produced 0.5 million ounces of attributable silver and 4,500 ounces of attributable gold, a decrease of approximately 8% for silver production and an increase of approximately 42% for gold production relative to the second quarter of 2018. As per Wheaton’s precious metals purchase agreement with Hudbay relating to Constancia (the “Constancia PMPA”), should Hudbay fail to achieve a minimum level of throughput at the Pampacancha satellite deposit during 2018, 2019 and 2020, Wheaton will be entitled to an increased portion of gold from Hudbay. As per Hudbay’s MD&A for the first quarter of 2019, mining of the Pampacancha deposit is not expected to begin until later in 2020. Assuming ore production does not begin until 2020, the Company will be entitled to receive an additional 8,020 ounces of gold in each of 2019 and 2020 relative to the Constancia PMPA, with the deliveries to be made in quarterly installments, of which 2,005 ounces were received during the second quarter of 2019 and reported as production.
Other Gold
In the second quarter of 2019, total Other Gold attributable production was 4,800 ounces, a decrease of approximately 36% relative to the second quarter of 2018. The decrease was due primarily to the cessation of production at the Minto mine which was placed on care and maintenance in the fourth quarter of 2018. The Minto mine was sold by Capstone Mining Corp. to Pembridge Resources plc (“Pembridge”) effective June 3, 2019. According to Pembridge’s news release dated June 4, 2019, Pembridge expects to recommence commercial production at Minto during the fourth quarter of 2019; however, Wheaton does not include any additional production from Minto in its 2019 or five-year guidance.
Other Silver
In the second quarter of 2019, total Other Silver attributable production was 2.3 million ounces, an increase of approximately 6% relative to the second quarter of 2018. The increase was driven primarily by higher production from the Zinkgruvan and Aljustrel mines partially offset by lower production at Yauliyacu.
Development Update – Toroparu
Sandspring Resources Ltd. announced results from a Preliminary Economic Assessment (“PEA”) of its Toroparu Gold Project in Guyana in a news release dated June 4, 2019, and subsequently filed the PEA on July 23, 2019.
Produced But Not Yet Delivered 3
As at June 30, 2019, payable ounces attributable to the Company produced but not yet delivered amounted to 80,700 payable gold ounces, 3.3 million payable silver ounces and 4,500 payable palladium ounces, representing an increase of 5,900 payable gold ounces, a decrease of 0.2 million payable silver ounces and a decrease of 300 payable palladium ounces during the three month period ended June 30, 2019. Payable gold ounces produced but not yet delivered increased primarily as a result of an increase related to the Salobo gold interest. Payable silver ounces produced but not yet delivered decreased slightly primarily as a result of a decrease related to the Peñasquito silver interest partially offset by an increase related to the Antamina silver interest. Payable ounces produced but not yet delivered to the Wheaton group of companies are expected to average approximately two months of annualized production for silver and two to three months for both gold and palladium but may vary from quarter to quarter due to a number of mining operation factors including mine ramp-up and timing of shipments.
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Detailed mine-by-mine production and sales figures can be found in the Appendix to this press release and in Wheaton’s consolidated MD&A in the ‘Results of Operations and Operational Review’ section.
Subsequent to the Quarter
Rosemont – Permitting
On August 1, 2019, Hudbay announced that the U.S. District Court for the District of Arizona (“Court”) issued a ruling in the lawsuits challenging the U.S. Forest Service’s issuance of the Final Record of Decision (“FROD”) for the Rosemont project in Arizona. The Court ruled to vacate and remand the FROD such that Rosemont cannot proceed with construction at this time. Hudbay stated that they believe that the Court has misinterpreted federal mining laws and Forest Service regulations as they apply to Rosemont and as such, they will be appealing the Court’s decision to the U.S. Ninth Circuit Court of Appeals. Hudbay indicates that the FROD was issued in June 2017 after a thorough process of ten years involving 17 co-operating agencies at various levels of government, 16 hearings, over 1,000 studies, and 245 days of public comment resulting in more than 36,000 comments. Wheaton has not made any upfront payments to date relative to Rosemont nor included any production from Rosemont in its five-year guidance.
Dividend
Third Quarterly Dividend
The third quarterly cash dividend for 2019 of US$0.09 will be paid to holders of record of Wheaton Precious Metals common shares as of the close of business on August 23, 2019 and will be distributed on or about September 5, 2019.
Under the Company’s dividend policy, the quarterly dividend per common share is targeted to equal approximately 30% of the average cash generated by operating activities in the previous four quarters divided by the Company’s then outstanding common shares, all rounded to the nearest cent. To minimize volatility in quarterly dividends, the Company has set a minimum quarterly dividend of $0.09 per common share for the duration of 2019.
The declaration, timing, amount and payment of future dividends remain at the discretion of the Board of Directors. This dividend qualifies as an ‘eligible dividend’ for Canadian income tax purposes.
Dividend Reinvestment Plan
The Company has previously implemented a Dividend Reinvestment Plan (“DRIP”). Participation in the DRIP is optional. For the purposes of this third quarterly dividend, the Company has elected to issue common shares under the DRIP through treasury at a 3% discount to the Average Market Price, as defined in the DRIP. However, the Company may, from time to time, in its discretion, change or eliminate the discount applicable to Treasury Acquisitions, as defined in the DRIP, or direct that such common shares be purchased in Market Acquisitions, as defined in the DRIP, at the prevailing market price, any of which would be publicly announced.
The DRIP and enrollment forms, including direct deposit, are available for download on the Company’s website at www.wheatonpm.com, accessible by quick links directly from the home page, and can also be found in the ‘investors’ section, under the ‘dividends’ tab.
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Registered shareholders may also enroll in the DRIP online through the plan agent’s selfservice web portal at:
https://www.canstockta.com/en/InvestorServices/Investor_Information/Issuer_List/IssuerDet ail.jsp?companyCode=1501.
Beneficial shareholders should contact their financial intermediary to arrange enrollment. All shareholders considering enrollment in the DRIP should carefully review the terms of the DRIP and consult with their advisors as to the implications of enrollment in the DRIP.
This press release is not an offer to sell or a solicitation of an offer of securities. A registration statement relating to the DRIP has been filed with the U.S. Securities and Exchange Commission and may be obtained under the Company’s profile on the U.S. Securities and Exchange Commission’s website at http://www.sec.gov. A written copy of the prospectus included in the registration statement may be obtained by contacting the Corporate Secretary of the Company at 1021 West Hastings Street, Suite 3500, Vancouver, British Columbia, Canada V6E 0C3.
Outlook
Wheaton’s estimated attributable precious metals production in 2019 is forecast to be approximately 690,000 gold equivalent ounces2. The mix of precious metals production has been updated based on developments in the first half of the year. Specifically, Wheaton now expects to produce approximately 385,000 ounces of gold, up from 365,000 ounces originally forecast due to stronger than anticipated production from Salobo, and 22.5 million ounces of silver, down from 24.5 million ounces as a result of the temporary shutdown of Peñasquito in the second quarter of 2019. Forecast production of palladium in 2019 remains unchanged at approximately 22,000 ounces. For the five-year period ending in 2023, the Company estimates that average annual gold equivalent production2 will amount to 750,000 ounces. As a reminder, Wheaton does not currently include any production from Hudbay’s Rosemont project nor the announced expansion at Salobo in its estimated average five-year production guidance4.
From a liquidity perspective, the $87 million of cash and cash equivalents as at June 30, 2019, combined with the liquidity provided by the available credit under the $2 billion Revolving Facility and ongoing operating cash flows positions the Company well to fund all outstanding commitments and known contingencies as well as providing flexibility to acquire additional accretive precious metal stream interests.
Webcast and Conference Call Details
A conference call and webcast will be held Friday, August 9, 2019, starting at 11:00 am (Eastern Time) to discuss these results. To participate in the live call, please use one of the following methods:
Dial toll free from Canada or the US: 888-231-8191 Dial from outside Canada or the US: 647-427-7450 Pass code: 6456709 Live audio webcast: Click here
Participants should dial in five to ten minutes before the call.
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The conference call will be recorded and available until August 16, 2019 at 11:59 pm (Eastern Time). The webcast will be available for one year. You can listen to an archive of the call by one of the following methods:
Dial toll free from Canada or the US: 855-859-2056 Dial from outside Canada or the US: 416-849-0833 Pass code: 6456709 Archived audio webcast: Click here
This earnings release should be read in conjunction with Wheaton Precious Metals’ MD&A and Financial Statements, which are available on the Company’s website at www.wheatonpm.com and have been posted on SEDAR at www.sedar.com.
Mr. Wes Carson, P. Eng., Vice President, Mining Operations is a “qualified person” as such term is defined under National Instrument 43-101 and has reviewed and approved the technical information disclosed in this news release.
Wheaton Precious Metals believes that there are no significant differences between its corporate governance practices and those required to be followed by United States domestic issuers under the NYSE listing standards. This confirmation is located on the Wheaton Precious Metals website at http://www.wheatonpm.com/Company/corporate-governance/default.aspx.
End Notes
1 Please refer to non-IFRS measures at the end of this press release. Dividends declared in the referenced calendar quarter, relative to the financial results of the prior quarter.
2 Commodity price assumptions for the gold equivalent production forecasts for 2019 and the five-year average are unchanged since the original forecasts at $1,300 / ounce gold, $16 / ounce silver, $1,350 / ounce palladium, and $21 / pound of cobalt.
3 Payable gold, silver and palladium ounces produced but not yet delivered are based on management estimates and may be updated in future periods as additional information is received.
4 In preparing the long-term production forecast, Wheaton has considered the impact of Vale’s announced approval of the Salobo III copper project, a brownfield expansion, which if completed as proposed, would increase processing throughput capacity from 24 Mtpa to 36 Mtpa once fully ramped up (the “Salobo Expansion”). However, readers are cautioned that Vale has not finalized its mine plan and as such, Wheaton has not included any production growth as a result of the Salobo Expansion.
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Condensed Interim Consolidated Statements of (Loss) Earnings
| (US dollars and shares in thousands, except per share amounts - unaudited) | 2018 | 2018 | ||||
| 2019 | 2019 | |||||
| Sales | $ 212,400 | $ 411,652 | ||||
| $ | 189,466 | $ | 414,515 | |||
| Cost of sales Cost of sales, excluding depletion Depletion | $ 62,580 62,494 | $ 118,994 119,759 | ||||
| $ | 60,957 | $ | 130,171 | |||
| 61,404 | 129,785 | |||||
| Total cost of sales | $ 125,074 | $ 238,753 | ||||
| $ | 122,361 | $ | 259,956 | |||
| Gross margin General and administrative Impairment charges | $ 87,326 11,972 - | $ 172,899 21,729 - | ||||
| $ | 67,105 | $ | 154,559 | |||
| 12,249 | 28,784 | |||||
| 165,912 | 165,912 | |||||
| (Loss) earnings from operations Gain on disposal of mineral stream interest Other (income) expense | $ 75,354 (245,715) (1,216) | $ 151,170 (245,715) (145) | ||||
| $ | (111,056) | $ | (40,137) | |||
| - | - | |||||
| 3,090 | 2,824 | |||||
| (Loss) earnings before finance costs and income taxes Finance costs | $ 322,285 7,367 | $ 397,030 14,474 | ||||
| $ | (114,146) | $ | (42,961) | |||
| 13,306 | 27,252 | |||||
| (Loss) earnings before income taxes Income tax recovery | $ 314,918 3,224 | $ 382,556 3,709 | ||||
| $ | (127,452) | $ | (70,213) | |||
| 2,758 | 2,868 | |||||
| Net (loss) earnings | $ 318,142 | $ 386,265 | ||||
| $ | (124,694) | $ | (67,345) | |||
| Basic (loss) earnings per share Diluted (loss) earnings per share Weighted average number of shares outstanding Basic Diluted | $ 0.72 $ 0.72 443,191 443,770 | $ 0.87 $ 0.87 442,961 443,453 | ||||
| $ | (0.28) | $ | (0.15) | |||
| $ | (0.28) | $ | (0.15) | |||
| 445,769 | 445,083 | |||||
| 446,470 | 445,815 |
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Condensed Interim Consolidated Balance Sheets
| (US dollars in thousands - unaudited) | As at June 30 | As at December 31 2018 | |||
|---|---|---|---|---|---|
| 2019 | |||||
| Assets Current assets Cash and cash equivalents Accounts receivable Current taxes receivable Other | $ 75,767 2,186 210 1,541 | ||||
| $ | 87,182 | ||||
| 1,324 | |||||
| 125 | |||||
| 2,653 | |||||
| Total current assets | $ | 91,284 | $ 79,704 | ||
| Non-current assets Mineral stream interests Early deposit mineral stream interests Mineral royalty interest Long-term equity investments Investment in associates Convertible note receivable Property, plant and equipment Other | $ 6,156,839 30,241 9,107 164,753 2,562 12,899 3,626 10,315 | ||||
| $ | 5,861,139 | ||||
| 30,991 | |||||
| 9,107 | |||||
| 216,328 | |||||
| 984 | |||||
| 11,836 | |||||
| 7,621 | |||||
| 11,533 | |||||
| Total non-current assets | $ | 6,149,539 | $ 6,390,342 | ||
| Total assets | $ | 6,240,823 | $ 6,470,046 | ||
| Liabilities Current liabilities Accounts payable and accrued liabilities Current taxes payable Current portion of performance share units Current portion of lease liabilities Other | $ 19,883 3,361 5,578 - 19 | ||||
| $ | 17,451 | ||||
| 13 | |||||
| 6,913 | |||||
| 647 | |||||
| 17 | |||||
| Total current liabilities | $ | 25,041 | $ 28,841 | ||
| Non-current liabilities Bank debt Lease liabilities Deferred income taxes Performance share units | $ 1,264,000 - 111 5,178 | ||||
| $ | 1,095,500 | ||||
| 3,833 | |||||
| 125 | |||||
| 4,378 | |||||
| Total non-current liabilities | $ | 1,103,836 | $ 1,269,289 | ||
| Total liabilities | $ | 1,128,877 | $ 1,298,130 | ||
| Shareholders' equity Issued capital Reserves Retained earnings | $ 3,516,437 7,893 1,647,586 | ||||
| $ | 3,560,705 | ||||
| 51,207 | |||||
| 1,500,034 | |||||
| Total shareholders' equity | $ | 5,111,946 | $ 5,171,916 | ||
| Total liabilities and shareholders' equity | $ | 6,240,823 | $ 6,470,046 |
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Condensed Interim Consolidated Statements of Cash Flows
| (US dollars in thousands - unaudited) | 2018 | 2018 | ||||
| 2019 | 2019 | |||||
| Operating activities Net (loss) earnings Adjustments for Depreciation and depletion Gain on disposal of mineral stream interest Impairment charges Interest expense Equity settled stock based compensation Performance share units Income tax expense (recovery) Loss on fair value adjustment of share purchase warrants held Share in losses of associate Fair value (gain) loss on convertible note receivable Investment income recognized in net (loss) earnings Other Change in non-cash working capital | $ 318,142 62,727 (245,715) - 5,659 1,394 3,316 (3,224) 12 - (99) (299) 287 (1,772) | $ 386,265 120,232 (245,715) - 11,249 2,643 3,500 (3,709) 111 201 1,290 (502) 513 (4,847) | ||||
| $ | (124,694) | $ | (67,345) | |||
| 61,871 | 130,745 | |||||
| - | - | |||||
| 167,561 | 167,561 | |||||
| 12,434 | 25,586 | |||||
| 1,456 | 2,813 | |||||
| 793 | 201 | |||||
| (2,758) | (2,868) | |||||
| 7 | 7 | |||||
| - | 62 | |||||
| 1,934 | 1,063 | |||||
| (297) | (539) | |||||
| 242 | 670 | |||||
| 4,659 | (2,511) | |||||
| Cash generated from operations before income taxes and interest Income taxes paid Interest paid Interest received | $ | 123,208 | $ 140,428 (48) (5,459) 279 | $ | 255,445 | $ 271,231 (98) (11,055) 462 |
| (24) | (3,586) | |||||
| (14,200) | (24,907) | |||||
| 274 | 500 | |||||
| Cash generated from operating activities | $ 135,200 | $ 260,540 | ||||
| $ | 109,258 | $ | 227,452 | |||
| Financing activities Bank debt repaid Bank debt drawn Credit facility extension fees Share purchase options exercised Lease payments Dividends paid | $ (79,000) 372,500 (5) 878 - (64,589) | $ (186,000) 372,500 (1,205) 1,027 - (64,589) | ||||
| $ | (88,000) | $ | (168,500) | |||
| - | - | |||||
| - | (1,100) | |||||
| 5,502 | 20,393 | |||||
| (153) | (323) | |||||
| (63,515) | (63,515) | |||||
| Cash (used for) generated from financing activities | $ 229,784 | $ 121,733 | ||||
| $ | (146,166) | $ | (213,045) | |||
| Investing activities Mineral stream interests Early deposit mineral stream interests Net proceeds on disposal of mineral stream interests Acquisition of long-term investments Investment in associate Dividend income received Other | $ (610,235) (4,255) 230,000 (1,016) - 20 (2,384) | $ (610,235) (4,458) 230,000 (1,016) - 40 (2,425) | ||||
| $ | - | $ | (174) | |||
| (750) | (750) | |||||
| - | - | |||||
| (909) | (909) | |||||
| (132) | (132) | |||||
| 23 | 39 | |||||
| (53) | (1,207) | |||||
| Cash used for investing activities | $ (387,870) | $ (388,094) | ||||
| $ | (1,821) | $ | (3,133) | |||
| Effect of exchange rate changes on cash and cash equivalents | $ | 130 | $ (21) | $ | 141 | $ (39) |
| (Decrease) increase in cash and cash equivalents Cash and cash equivalents, beginning of period | $ | (38,599) | $ (22,907) 115,568 | $ | 11,415 | $ (5,860) 98,521 |
| 125,781 | 75,767 | |||||
| Cash and cash equivalents, end of period | $ 92,661 | $ 92,661 | ||||
| $ | 87,182 | $ | 87,182 |
- 12 -
Summary of Ounces Produced
| Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 | |||||||
|---|---|---|---|---|---|---|---|
| Q2 2019 | Q1 2019 | ||||||
| Gold ounces produced ² Salobo Sudbury 3 Constancia San Dimas 4 Stillwater Other Minto 5 777 | 76,995 72,423 67,466 64,896 80,341 76,994 6,646 6,510 6,476 3,511 8,568 8,519 4,266 3,261 3,187 3,315 2,947 2,498 10,092 10,642 5,726 - - - 3,472 6,376 - - - - 1,441 2,546 2,554 2,707 3,328 6,105 4,248 4,124 4,982 5,645 5,478 5,114 | ||||||
| 67,056 | 60,846 | ||||||
| 9,029 | 11,374 | ||||||
| 4,533 | 4,826 | ||||||
| 11,496 | 10,290 | ||||||
| 3,675 | 3,137 | ||||||
| - | - | ||||||
| 4,788 | 4,445 | ||||||
| Total Other | 4,788 | 4,445 | 5,689 6,670 7,536 8,352 8,806 11,219 | ||||
| Total gold ounces produced | 107,160 105,882 90,391 80,074 100,662 99,230 | ||||||
| 100,577 | 94,918 | ||||||
| Silver ounces produced 2 San Dimas 4 Peñasquito Antamina Constancia Other Los Filos Zinkgruvan Yauliyacu Stratoni Minto 5 Neves-Corvo Aljustrel Lagunas Norte 6 Pierina 6 Veladero 6 777 | - - 607 1,606 1,324 1,043 1,455 1,050 1,267 1,450 1,561 1,641 1,225 1,406 1,394 1,304 1,434 1,686 695 682 552 598 621 572 29 21 33 29 48 43 608 530 453 565 619 710 233 597 719 550 335 588 149 165 211 137 131 137 8 25 30 35 30 43 509 458 421 405 305 341 475 514 138 - - - - - - 217 253 243 - - - 107 111 107 - - - 265 211 201 113 136 152 146 146 145 | ||||||
| - | - | ||||||
| 699 | 1,595 | ||||||
| 1,343 | 1,180 | ||||||
| 511 | 588 | ||||||
| 37 | 38 | ||||||
| 631 | 479 | ||||||
| 627 | 528 | ||||||
| 180 | 143 | ||||||
| - | - | ||||||
| 391 | 498 | ||||||
| 322 | 470 | ||||||
| - | - | ||||||
| - | - | ||||||
| - | - | ||||||
| 93 | 95 | ||||||
| Total Other | 2,281 | 2,251 | 2,124 2,446 2,157 2,456 2,189 2,558 | ||||
| Total silver ounces produced | 5,499 5,584 5,977 7,414 7,129 7,500 | ||||||
| 4,834 | 5,614 | ||||||
| Palladium ounces produced ² Stillwater | 5,869 8,817 - - - - | ||||||
| 5,736 | 4,729 | ||||||
| GEOs produced 7 SEOs produced 7 | 177,808 181,901 166,039 173,586 194,097 198,033 15,009 14,699 13,118 13,763 14,810 15,033 | ||||||
| 161,571 | 167,151 | ||||||
| 14,221 | 13,999 | ||||||
| Gold / Silver Ratio 7 Palladium / Silver Ratio 7 Gold / Palladium Ratio 7 | 84.4 80.8 79.1 63.4 1.1 1.3 | ||||||
| 88.0 | 83.8 | 79.0 | 79.3 | 76.3 | 75.9 | ||
| 93.2 | 92.1 | 59.2 | 61.8 | 59.3 | 53.5 | ||
| 0.9 | 0.9 | 1.3 | 1.3 | 1.3 | 1.4 | ||
| Average payable rate 2 Gold Silver Palladium | 95.5% 95.4% 94.9% 94.7% 95.0% 94.9% 83.1% 83.5% 86.8% 89.7% 90.1% 90.0% 96.4% 94.6% n.a. n.a. n.a. n.a. | ||||||
| 95.3% | 95.6% | ||||||
| 83.3% | 82.9% | ||||||
| 87.6% | 98.5% |
1) All figures in thousands except gold and palladium ounces produced.
2) Ounces produced represent the quantity of gold, silver and palladium contained in concentrate or doré prior to smelting or refining deductions. Production figures and average payable rates are based on information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those situations where other information is not available. Certain production figures may be updated in future periods as additional information is received.
3) Comprised of the Coleman, Copper Cliff, Garson, Stobie, Creighton and Totten gold interests. The Stobie gold interest was placed into care and maintenance as of May 2017.
4) Pursuant to the San Dimas SPA with Primero, the Company acquired 100% of the payable silver produced at San Dimas up to 6 million ounces annually, and 50% of any excess for the life of the mine. The San Dimas SPA was terminated on May 10, 2018 and concurrently the Company entered into the new San Dimas PMPA.
5) The Minto mine was placed into care and maintenance in October 2018.
6) In accordance with the Pascua-Lama precious metal purchase agreement, all deliveries from Lagunas Norte, Pierina and Veladero ceased effective March 31, 2018.
7) GEOs and SEOs are provided to assist the reader. GEOs are calculated by converting silver to a gold equivalent by using the ratio of the average price of gold to the average price of silver and by converting palladium to a gold equivalent by using the average price of gold to the average price of palladium. SEOs are calculated by converting gold to a silver equivalent by using the ratio of the average price of gold to the average price of silver and by converting palladium to a silver equivalent by using the average price of palladium to the average price of silver. Average prices are as per the LBMA during the period.